Help, What does this mean? Mortgage companies may have to Nationalize.

Time to fight

Absolutely horrible news!

I owe my soul to the company store,,,,

It means America will move yet another step closer to full-blown communism as the state will now own the mortgage agencies and you and I will be the ones who actually pay for them.

It also means that the inept government will now be running them and thus you can expect increased prices where possible, bureaucratic red tape and lousy "customer service".

It means people who have money will downsize, or take their money out of the country. It means if you pay taxes, you will be paying more, it means that even if they cut taxes, they will be raising the inflation tax. It means call your congressman and get his butt in gear to stop this now.

No, not another book, just the sad realization I have come to: If I am not sure what they are doing, I am probably getting screwed!

buy silver and gold as they will be going up in price.

that those of us who didn't make or take risky loans will now pay for those who did. Socialism sucks!

Live Free Or Die

the GSE mortgage agencies were originally creations of the federal government. They serve to establish both a secondary market for mortgage loans and gov't insured long term investments. This is in turn aids in the creation of such loans...as a lender, I am more likely to do a loan if I can sell it on the market as opposed to holding it and taking on the risk of default, collateral deterioration, etc. I'll sell it, and hold onto the servicing for a fee. Easier to obtain a mortgage, easier to write them, and the investors have nice gov't guaranteed investments...everyone wins. The GSEs also set the standard for loan underwriting.

At one point in their history, the GSEs were restructured in a manner that legally eliminated any explicit government guarantee of the investments ("privatized"). However, this had very little effect on investors as it is assumed that the gov't would not allow the GSEs to collapse...too big to fail, the implicit guarantee is really based on the disaster that would result from a failure to guarantee.

But today, apparently, investor sentiment is so bad that the implicit guarantee is not enough. A lack of investor confidence may lead to a reduction in the availability of mortgage loans in a sort of trickle down effect. Nationalization, I guess, would make GSE investments an obligation of the tax payers, like a T-bond.

Sounds kinda nefarious, but I worked (um imagine I worked, gotta be careful here) for just a small bank with about a billion dollars in investments that were concentrated in GSE bonds. If these were to lose significant value, a snowball of loss and reduced bank lending would develop that would be big enough to drag us all to hell from its sheer weight.

...then they get bailed out by tax dollars.

It's not a good example of how to teach someone to be responsible for their own actions. In this case, the banks don't get put in time out for poor lending practices.

will take them over as with what happened to Northern Rock in England recently. I brought this question up on 3 or 4 posts over the last couple of days as to if that might happen here, did not get much feedback.